Oil Exporter Reporting and Levy Rules

Summary#

This Order in Council sets April 1, 2021 as the day several subsections of the Budget Implementation Act, 2018, No. 2 come into force. The change activates parts of the Marine Liability Act (MLA) that require some oil exporters to report bulk oil shipments by ship and potentially pay a levy to the Ship-source Oil Pollution Fund (SOPF).

What it does#

• Brings into force specific MLA provisions on April 1, 2021 that:
  • Require exporters who ship large amounts of oil to file annual information returns about those exports.
  • Create the legal basis for exporters to be charged a levy and an additional levy if those levies are activated.
  • Require exporters to keep records of exported oil and allow for exemptions or different quantity rules by regulation.
  • Establish penalties and enforcement tools for failing to file, providing false information, or not paying a levy.
• Sets reporting thresholds so that, from the entry-into-force date:
  • Exporters who ship in a calendar year more than 150,000 metric tons of persistent oil in bulk as cargo must report.
  • Exporters who ship in a calendar year more than 17,000 metric tons of non-persistent oil in bulk as cargo must report.
• Notes that there is currently no plan to activate the levy. The first reports for affected exporters will be due in February 2022.
• Specifies possible sanctions for non-compliance:
  • Summary-conviction fine up to $250,000.
  • Administrative monetary penalties up to $50,000 for an individual and up to $250,000 for a company, per violation.

Who's affected#

• Exporters that ship bulk oil by vessel and meet the thresholds above.
• The oil industry, including fuel exporters and companies that arrange bulk oil shipments.
• Transport Canada and the SOPF Administrator, who will receive reports and enforce the rules.
• Others in the marine shipping and logistics chain could notice indirect effects (paperwork, record-keeping). If it is unclear whether a specific company or shipment is covered, that company should check the exact thresholds and definitions in the MLA and related regulations.

Why it matters#

• It completes a planned modernization of the fund that pays for cleanup and compensation after ship oil spills. That helps apply the "polluter pays" idea to exporters as well as shipowners.
• Practically, some exporters will need to start tracking and reporting their bulk oil exports and keep records. That creates a new compliance task and, in the future, could lead to levies if activated.
• The rules improve Canada's ability to fund responses to oil spills and to require compensation for environmental and economic harm.